The proportion of homeowners with over £300,000 left to pay on their mortgage has nearly doubled in the past seven years, rising from 5% to 9% between 2017 and 2024, Broadstone’s analysis of the latest Financial Lives Survey from the Financial Conduct Authority (FCA) revealed.
This growth was particularly marked in areas where house prices are higher such as London, where that proportion has risen from 17% to 28% over the same seven-year period.
The FCA’s data also showed that one in seven (14%) homeowners had outstanding mortgage debt worth at least four times their annual income.
This figure rose from 11% seven years ago, albeit seeing a slight decline from 16% in 2020 and 2022.
The FCA’s section on mortgages also uncovered some concerning statistics around homeowners’ financial capabilities.
Over a fifth (22%) who could have changed their mortgage rate in the last three years (for example, re-mortgaging, porting, or buying) said they did not compare mortgages from two or more lenders.
Despite this, one in 10 (10%) UK adults buying with a residential mortgage or pay part rent / part mortgage said that an increase of either £1 to £49 (3%) or £50 to £99 (7%) in their monthly repayments would mean they would struggle to meet their payment.
Paul Matthews, senior director of risk at Broadstone, said: “The figures from the regulator shine a helpful light on trends within the mortgage market, however they do not make for particularly happy reading.
“It is clear that many more homeowners are taking on significant levels of mortgage debt yet household incomes have not kept pace with the continued rises in house prices.
“Given lenders typically cap the maximum amount homeowners can borrow at 4.5x annual household income it is interesting to see that one in seven said their outstanding mortgage debt was over 4x yearly earnings.”
He added: “Moreover, the statistically significant increase in homeowners with over £300,000 in mortgage debt demonstrates the concern over the impact of rising rates in the past few years – especially for homeowners in London who typically hold bigger mortgages.
“This concern is emphasised by some of the behaviours that the FCA’s data also uncovered with many failing to shop around for the best deal despite small adjustments in monthly repayments making a significant difference over a full mortgage term.”
